Liquidated damages assessment checklist
Liquidated damages (LDs) compensate the principal for late delivery but can be struck down as penalties if not a genuine pre-estimate of loss. This checklist is for principals and their lawyers assessing LD entitlement.
This is a 12-step checklist for assessing liquidated damages entitlement on a construction project, including penalty risk and certification.
The checklist
Identify LD clause
Identify the LD clause and the rate per day or per week.
Check LD cap
Check whether the clause caps LDs at a percentage or absolute amount.
Confirm date for practical completion
Identify the original contractual date for practical completion.
Apply approved EOTs
Apply all approved extensions of time to arrive at the adjusted date.
Identify actual practical completion
Identify the date practical completion was actually achieved and certified.
Calculate days of delay
Calculate the number of days between adjusted and actual completion dates.
Check prevention principle
Assess whether principal acts of prevention could defeat LD claims.
Check penalty doctrine
Consider whether the LD rate is a genuine pre-estimate or unenforceable penalty per Paciocco v ANZ.
Check notice requirements
Check any contractual notice requirements before LDs can be imposed.
Deduct LDs from progress claim
Deduct accrued LDs from the next progress claim or demand payment.
Document certification
Document the certifier's LD assessment reasoning.
Respond to contractor dispute
Respond to any contractor challenge with supporting calculation.
When this checklist applies
Use whenever assessing LD entitlement after the adjusted date for practical completion passes.
Common pitfalls
- Not applying approved EOTs before calculating LDs
- Principal acts of prevention leaving LDs unenforceable
- LD rate challenged as penalty
- Missing contractual notice requirement
- Cap exceeded in calculation
Run this checklist on a real matter
Quillio can calculate LD entitlement applying EOTs and flag penalty risk. See /practice-areas/construction-lawyers or start a free trial.
General guidance for LD assessments. Apply the specific contract terms and current case law.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
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